Traffic cameras billed as answer to Chicago’s budget deficit

Red-light cameras have been combined with short yellow lights to catch drivers …

The Windy City, like a lot of other metropolitan areas of late, is facing major budget deficits in the face of the recession's strong bite. State and local governments alike have been hunting for additional sources of revenue, so it's not surprising that a Chicago alderman would entertain the possibility of installing red light cameras along the city's major thoroughfares and intersections. This time around, though, the company trumpeting the addition of these digital watchdogs isn't portraying them as useful tools for catching speeders—instead, camera provider InsureNet claims to have developed "a simple yet complete answer that delivers totally accurate, instant insurance status verification. An additional unique advantage is that this system is also non-invasive, ensuring protection for every insurer and policyholder."

The Chicago Sun-Timesquotes InsureNet president Dr. Jonathan Miller on what the city might expect to earn with the system in 2009. "Certainly, it will be well in excess of $100 million," Dr. Miller said. "We think at least $200 million. And the upward projections are far higher." InsureNet would charge a collection fee of "just" 30 percent in exchange for its services. Clearly, this type of system—installed at no small cost—is all about making money.

InsureNet's website and supporting documents (PDF) are so thickly slathered with PR frosting that it's hard to ascertain how the company's system actually works. Sweeping statements are a way of life; the InsureNet system "addresses all problems...stream(lines) the entire vehicle insurance process...provides dramatic benefits...saves and provides the average State Government with hundreds of millions of dollars annually and saves the Insurance Industry even more." But wait, there's MORE:

InsureNet is provided free of charge to law enforcement agencies, private residents, and vehicle insurers, 24/7/365. The National Law Enforcement Communication System (NLETS) it uses has never been compromised, the company assures us, and the entire InsureNet system actually lets insurance companies do less than they do now. Finally, if you haven't had enough by now, InsureNet is safer, "totally accurate," and provides all parties "with reliable, automatic, and totally safe data which is completely free of all personal details." Got all that?

Even if we assume that InsureNet's database and citation system works well and accept the company's allegation that nearly one-in-four drivers on the road is uninsured (the Insurance Research Council, or IRC, estimates the rate may hit one-in-six by 2010), there are serious questions to consider when evaluating who, exactly, is going to pay the city of Chicago the several hundred million that Dr. Miller is dangling in front of the cash-strapped aldermen.

In a recent report (PDF), the IRC wrote that it "found a strong correlation between the percent of uninsured motorists and the unemployment rate: An increase in the unemployment rate of one percentage point is associated with an increase in the uninsured motorist rate of more than three-quarters of a percentage point."

It's not hard to connect the dots on this one. If unemployed workers are the most likely to cancel their insurance, and InsureNet's system targets the uninsured, than the city of Chicago would, in effect, be balancing the books on the shoulders of those least able to afford it. Indeed, the city could find itself confronting a virtual mob of angry citizens who are funding social services and unemployment benefits out of their own unemployment checks.